Bitcoin (BTC), the world’s largest cryptocurrency by market capitalization, regained the $30,000 level after a bout of volatility over the weekend.
The leading cryptocurrency is trading around $3,408, up nearly 1.7% in the last 24 hours. Despite this slight recovery, bitcoin is still down 55.76% from its all-time high of $68,789 in November last year, according to data from CoinMarketCap.
Investor interest in the asset has also rebounded, with global bitcoin trading volume up 20% to $24.36 billion in the past 24 hours.
In addition to the massive price action, the technical aspects of the Bitcoin network, specifically the upcoming mining difficulty update, paint a slightly more bearish picture.
On May 11, the difficulty of the Bitcoin network reached an all-time high of 31,251 tons, according to data from Blockchain.com.
Network difficulty measures how computationally difficult it is to mine a block of bitcoin, with greater difficulty requiring more power to do so. This scale is updated, either increasing or decreasing, approximately every two weeks.
The increased mining difficulty also means that the cost of bitcoin mining increases exponentially. The current cost of production per bitcoin is around $26,252 according to the mining analytics platform macro.
Although profits can be taken at today’s prices, it appears that many miners have recently switched off their machines.
This is because network difficulty is expected to drop by 4.1% at the next automatic adjustment on Wednesday, according to CoinWarz.
This means that the cost of production will also decrease because it is a little easier to mine Bitcoin. Assuming the price of bitcoin does not fall with it, it could also become profitable enough to lure new hardware back into the network.
Market sentiment is still bearish
According to data from IntoTheBlockVarious signals across the chain and general sentiment also indicate that the market is still bearish.
Fears of rising inflation and the recent hike in interest rates by the Federal Reserve have led to a global recession in the stock and cryptocurrency markets.
Although once recommended as a hedge against inflation, so far Bitcoin has emerged as highly correlated with the stock market (Specifically technology stocks).
Not giving an opinion
The opinions and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.
Do you want to be a coding expert? Get the best of decryption straight to your inbox.
Get the biggest crypto news stories + weekly reports and more!